GST Rates for Goods and Services
The Goods and Services Tax (GST) has been one of the key things that has caught the attention of the market given its implications on earnings of companies. GST council has made the much-awaited announcements around tax rates for various categories of goods on day one of a two-day meeting of the said council at Srinagar. There has been a hype around these rates for a while and now these rates are finally in the public domain.
A number of products and services would become cheaper and others would become heavier on the wallet. Under GST, all goods and services transacted in India are classified under the HSN code system or SAC Code system. Goods are classified under HSN Code and services are classified under SAC Code. Based on the HSN or SAC code, GST rates have been fixed in five slabs, namely NIL, 5%, 12%, 18% and 28%.
The justification behind this multi-tier system is that essential goods and services cannot be taxed at the same rate as luxury products and services. The government has kept a large number of items under 18% tax slab. The government categorized 1211 items under various tax slabs. Gold and rough diamonds do not fall under the current rate slab ambit and will be taxed at 3% and 0.25% respectively.
HSN code or Harmonized System Nomenclature code number is an internationally adopted commodity description and coding system developed by the World Customs Organization (WCO). HSN code is used by more than 200 countries as a basis for their customs tariffs. Currently over 98 % of the merchandise in international trade is classified under HSN code With the HSN code acting as a universal classification for goods, the Indian Government has decided to adopt the use of HSN code for classification of goods under GST and levy of GST.
The HSN Code, 2017 Edition is the current valid version applied in international trade transactions. Prior to the implementation of the HSN Code- 2017 Edition, HSN Code – 2012 Edition was applied in all international trade transactions. The HSN Codes are first classified into sections, chapters, contains the six-digit codes of the Harmonized System. To look up a HSN code you can use the HSN code finder or drill-down from Section to Chapter to the HSN Code.
GST Tax Rate in India:
Here is a low-down on the tax slab these items would attract:
| Percentage of TAX (%) | GOODS | SERVICE |
| Nil (0%) | Jute, fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, Prasad, salt, Bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom, Bones and horn cores, bone grist, bone meal, etc.; hoof meal, horn meal, Cereal grains hulled, Palmyra jaggery, Salt – all types, Kajal, Children’s’ picture, drawing or coloring books, Human hair | Hotels and lodges tariff below Rs 1,000, Grandfathering service has been exempted under the GST. Rough precious and semi-precious stones will attract GST rate of 0.25 per cent. |
| 5% | Edible oil, sugar, spices, tea, coffee (except instant), Mishti/Mithai (Indian Sweets), fish fillet, Apparel below Rs 1000, packaged food items, footwear below Rs 500, cream, skimmed milk powder, branded partner, frozen vegetables, pizza bread, rusk, Sabudana, kerosene, coal, medicines, stent, lifeboats, Cashew nut, Cashew nut in shell, Raisin, Ice and snow, Bio gas, Insulin, Agarbatti, Kites, Postage or revenue stamps, stamp-post marks, first-day covers | Transport services (Railways, air transport), small restaurants will be under the 5% category because their main input is petroleum, which is outside GST ambit |
| 12% | Computers, Apparel above Rs 1000, frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, coloring books, picture books, umbrella, sewing machine, cell phones, Ketchup & Sauces, All diagnostic kits and reagents, Exercise books and notebooks, Spoons, forks, ladies, skimmers, cake servers, fish knives, tongs, Spectacles, corrective, Playing cards, chess board, carom board and other board like Ludo. | State-run lotteries, Non-AC hotels, business class air ticket, fertilizers, Work Contracts will fall under 12 per cent GST tax slab |
| 18% | Hair oil, toothpaste and soaps (currently at 28%)
Capital goods and industrial intermediaries (big boost to local industries) footwear costing more than Rs 500, Bidi Patta, Biscuits (All categories), flavored refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors, Kajal pencil sticks, Headgear and parts thereof, Aluminium foil, Weighing Machinery [other than electric or electronic weighing machinery], Printers [other than multifunction printers], Electrical Transformer, CCTV, Optical Fiber, Bamboo furniture, Swimming pools and padding pools, Curry paste; mayonnaise and salad dressings; mixed condiments and mixed seasonings |
AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under the GST, Room tariffs between Rs 2,500 and Rs 7,500, Restaurants inside five-star hotels |
| 28% | Small cars (+1% or 3% cess) Luxury & sin items like BMWs, cigarettes and aerated drinks (+15% cess)
High-end motorcycles (+15% cess), Bidis, chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use, will attract 28 % tax – the highest under GST system. |
Privately-run lotteries authorized by the states, hotels with room tariffs above Rs 7,500, 5-star hotels, race club betting, cinema will attract tax 28 per cent tax slab under the GST. |
Coal to be taxed at 5 percent against current 11.69 per cent. This will prove beneficial for the power sector and heavy industries which rely on coal supply. This will also help curb inflation. Expect a good run for Coal India tomorrow.
Toothpaste, hair oil, and soaps will all be taxed at 18 percent, where currently they are taxed at 28 percent. Most of the cosmetics and fast moving consumer goods (FMCG) brands should get the benefit of this tax reduction. After all, Fair and Lovely might seem fairer in its pricing from now on!
